Banking Knowledge Series (November) - 1

valued
customer in favour of M/s Well Worth Exports Inc, Holland. The beneficiary,
after making the shipment, got the documents negotiated and the negotiating
bank has now sent the documents for reimbursement. In the meanwhile, the ship
in which the g00ds were shipped sank in the high seas. Your customer, on
whose behalf the L/C was issued, has requested your branch not to reimburse
the amount negotiated. How will you handle the situation?

a) The request of the customer will be
accepted. Documents will be returned. Payment will be refused.

b) In L/C transaction, bank deals in documents
not in g00ds. The issuing bank's decision should be based only on the
documents and not on any other factors like non-receipt of g00ds or sinking
of ship.

c) Reimbursement will not be made provided the
customer furnishes stamped letter of indemnity to the bank.

d) The customer will be requested to take up the matter with his
supplier. Meanwhile, the reimbursement will be withheld.

B

2)On invocation of the guarantee by the bank, the Credit Guarantee
Fund shall make payment against the claim to the extent of ______:

a) 50% of the amount of default with maximum of
Rs 18.75 lac.

b) 50% of the amount of default with maximum of
Rs 20 lac.

c) 75% of the amount of default with maximum of
Rs 18.75 lac.

d) 75% of the amount of default with maximum of
Rs 20 lac.

C

3)Who of the following cannot be a guardian for Mohammedan minor
unless appointed by will or Court?

a) Father b)
Mother c) Father's
father d) Father's brother

e) All of these can be guardian without Court
order or will

B

4)M/s Ghaturanan and Sons are having three partners, namely
Chitra, Mitra and Vichitra. They are having an account with State Bank of
Hyderabad for the last five years. Operational instructions in the account
are that, any partner can operate the account. A partner of the firm gave a
notice to the bank that one of the partners, Mr. Santa, has been retired and,
therefore, he will not operate the account. Thereafter, the new mandate was
given to the bank by the partnership firm that out of the two remaining
partners either could operate the account After some time, a cheque signed by
the retired partner, bearing the date when he was a partner, is presented in
the account. Will this cheque be paid or not?

a) The cheque will be paid because the partner
who signed the cheque was partner at the time of signing. Third parties
cannot be made to suffer due to the signatory partner's retirement.

b) The cheque can be paid if one of the
remaining partners confirms the cheque by adding his signature or informing
the bank in writing that the cheque should be paid.

c) The cheque will be paid by the bank and in
case of dispute, the amount will be recovered from the partner who has signed
the cheque.

d) The paying bank is required to see the
capacity of the party at the time of debit into the account and has no
concern with the date of issue of cheque. If the bank makes payment, such
payment will not be a payment in due course.

d

5)While analysing balance sheet of M/s Mumtaz & Co, you notice
that long-term uses are 70% of long-term sources. Such a position would
generally indicate __:

a) Deterioration in Current ratio
b) Improvement in Current ratio

c) Over utilisation of installed capacity d) Very high debt service overage ratio

e) Very low debt service coverage ratio.

B

6)While analysing balance sheet of M/s Amitabh & Co. you
notice that short-term uses are 120% of short-term sources. Such a position
would generally indicate __:

a) Deterioration in Current ratio b) Improvement in Current ratio

c) Over utilisation of installed capacity

d) Very high debt service coverage ratio

e) Very low debt service coverage ratio

B

7)Which of the following statements is
wrong in respect of an equitable mortgage: a) It cannot be created in respect
of immovable property which is not specific

b) The property on which equitable mortgage is to be created
must be in a notified town

c) Every Equitable charge does not result in
equitable mortgage

d) Registration is not necessary

e) The mortgagor transfers the documents of
title to the mortgagee for the purpose of creating an equitable interest of
the mortgagee in the property.

b

8)What is the maximum upto, which a banking company can hold,
shares in any company, whether as pledge, mortgagee or absolute owner:

a) 5% of its total advances b) No such ceiling.

c) 30% of its own paid up capital and reserves
or 30% of the paid up capital of that company whichever is lower

d) 2% of total deposits of the Bank or 2% of total advance of
the bank whichever is lower. e)
None of these

C

9)A SSI unit had been sanctioned CC(Hyp) limit of Rs 10 lac with
20% margin against paid stocks. The unit submits stock statement, which
indicates the value of stocks as Rs. 14 lac with sundry creditors to the
extent of Rs. 4 lac. What will be the drawing power:

a) Rs 1 lac b)
Rs 2 lac c) Rs 4 lac d) Rs 8 lac

D

10)A SSI unit had
been sanctioned CC (Hyp) limit of Rs 12 lac with 40% margin. What should be
the value of security so that the borrower is allowed to utilize the limit
fully :